Centro auditor agrees to suspension

Stephen Cougle, the man who audited Centro's books in 2006-07, misclassifying $2.1 billion worth of debt, and is now partner at PricewaterhouseCoopers, has promised the corporate watchdog he will not do any auditing work for two and a half years.

He has also agreed to additional training and to submit his first three audits after the suspension is lifted in June 2015 for checking by another auditor approved by the Australian Securities and Investments Commission (ASIC).

A spokeswoman for PwC said Mr Cougle would remain a partner and stay with the firm working on internal issues. "The firm has acknowledged that there was a deficiency in the audit work undertaken for Centro in 2007."

"[Mr Cougle said] I led the Centro audit team and take responsibility for our work", the spokeswoman said.

The enforceable undertaking follows civil action against current and former directors of Centro and comes after shareholders settled a class action against the company and PwC for $200 million.

ASIC investigated the 2006-07 financial reports of Centro Properties Group (CNP) and Centro Retail Group (CER) after the companies came close to collapsing in the wake of the global financial crisis when they could not refinance their debt.

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They found the report labelled a $1.5 billion interest-bearing loan for CNP as non-current, when it was in fact current, and failed to disclose $2.8b worth of guarantees given to lenders after the balance date. The CER financial report labelled a $600 million loan as non-current, when it was also current.

ASIC found "Mr Cougle failed to carry out or perform adequately and properly the duties of an auditor" and was in breach of Australian auditing standards.

Commissioner John Price said on Monday: "Following auditing standards is not merely a compliance hurdle to clear. Investors will not be properly informed where audit deficiencies result in material misstatements in financial reports not being detected and addressed."

"There should be no doubt now that auditors must obtain reasonable assurance that a financial report is not materially misstated," Mr Price added.